⏰ COMMODITIES: PROBABILITIES OF APPRECIATION ⏰
The first quarter of 2024 has ended and the protagonist has been cocoa. In this regard, it is likely that the best of his achievements have already happened. However, the most important thing is to consider that explosive movements, such as that of cocoa, could occur in other commodities with greater possibilities of appreciation. If this scenario occurs, there might be another wave of inflation (mainly focused in the blue and white bars).
Ergo... What could be the catalysts for the above?
- Exporting US inflation to other currencies
- Increase in social support supported by more debt in Western World (State Interventionism)
- Blockage in supply chains due to regional conflicts (there already are an economic war)
- Climate change that threatens crops and production
In fact, it may happen because nations will need more materials (metals) to achieve Nearshoring (before a major conflict breaks out) and renew NATO's arms industry in the coming years. Furthermore, OPEC+ and BRICS+ could put pressure on (energy and grains) if hostilities continue. That is why the USrael (US + Israel) needs to gas Gaza and destroy Palestine, to secure the "new silk road" and avoid the old ones.
Given this, the Central Banks are not clear about what to do (or they lie in an election year in many countries and "curiously", in many of them in advance). BANXICO has fallen, the BoJ has risen and the FED and the ECB have left it the same. In short, the FED is not sure it has a 2% target yet.
What is "paradoxical", is since 2019 BlackRock warned about the risk of zero interest rates because in the event of a financial crisis, where Central Banks would not have tools to reactivate the economy. To do this, it was necessary to produce some inflation and control it with known monetary tools... Created or not, it happened in 2020 with the massive injection of liquidity.
The best analysis is yours!
J. Joel Padilla
Copyright: Joel Padilla 2024
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